It must improve efficiency and reduce T&D losses rather than
asking for tariff increase

By SHABBIR H. KAZMI
June 18 - 24, 2001

It is interesting to note that whenever WAPDA filed petition
for tariff hike these were resisted by consumers but NEPRA was kind enough to
allow the increases in the past. The same has happened when WAPDA's latest
petition for 75 paisa/kwh came for hearing. The previous decisions have
seriously jeopardized the autonomous status of the Authority and it was
considered to a 'rubber stamping' entity. However, it is expected that with a
new Chairman, Justice (Retired) Saud Jan, the Authority may succeed in removing
this impression.

It is understandable that while filing the petition WAPDA
would solicit a hike in tariff and cover up all its inefficiencies. However, it
is clear that soliciting tariff hike on flimsy points is getting difficult. All
types of consumers in general and industrial consumers in particular, who pay
their bills in time, strongly believe that neither the utility has taken
punitive action against defaulters nor its corrupt officials and employees but
never misses a chance to rip-off good consumers.

It was a disgrace to all the citizens of this country when
the Chief Executive of Islamabad Electricity Company alleged that all the
categories of electricity consumers were involved in power theft. However, he
ignored the fact that this theft is not possible without the connivance of WAPDA
staff. Some sector analysts even go to the extent of saying that it is the WAPDA
staff which induce consumers to pilfer electricity — either by allowing 'Kundas'
and/or tempering meters.

It was a unique feature that even the Planning Commission
strongly opposed the proposed 75 paisa/kwh tariff hike demand of WAPDA. In its
written comments, the Commission has suggested that WAPDA's petition was not
maintainable and the utility should be directed to come up with a realistic
approach. The Commission was of the view that proper disclosure has not been
made by WAPDA in arriving at the fixed cost. The Commission also questioned loss
figures as they appeared 'self generated'. WAPDA is not doing enough to reduce
its losses and bent upon passing its inefficiency to consumers. The Commission
was also critical of WAPDA's efforts in connection with recovery of outstanding
dues. Total receivables which were Rs 50.8 billion in June 2000 exceeded Rs
52.64 billion till end March 2001 — an addition of Rs 1.9 billion in nine
months. If the utility recovers only 30 per cent of its receivables, it would
have no need to increase tariff.

According to some sector analysts, WAPDA is nothing but a
white elephant. Though, it was decided to privatize its power wing nothing has
materialized in nearly three years. Its annual accounts were hardly made public
and cost of generation remains a million dollar question. Over the last three
years, most of the time, energy and resources were wasted in legal battle with
the IPPs. During this long period hardly any effort was made to improve
efficiency and optimize cost.

The biggest disappointing fact is that WAPDA is fast loosing
its industrial consumers. In the recent past WAPDA was boasting surplus power
but history proved the otherwise. Some sector analysts even go to the extent by
saying that either the high ups in WAPDA and the Ministry of Water and Power are
unable to read the writing on the wall or believe that no one has the common
sense to understand their absurd rationalization.

These analysts also say that unless various ministries,
public sector entities start paying their bills in time, WAPDA's financial
condition cannot improve. They say that the circular debt issue has attained
such a magnitude that it has started adversely affecting the economy of the
country. All those, industrial consumers, who are intelligent enough have
established their own power plants and have become least dependent on public
sector utilities.

It has proved beyond any doubt that tariff hike only
encourages electricity theft. Not because it cost more but because despite
paying a colossal tariff industries cannot depend on public sector utilities.
Consumers have also rejected the plea of utilities that lenders are responsible
for tariff hike.

It will not be out of context to refer to massive load
shedding by the KESC in its franchised area. It has caused not only losses to
industries but a colossal dent to the economy. Therefore, the only solution
is to privatize both WAPDA and KESC. The GoP must sell these entities without
further loss of time. No financial restructuring can improve their financial
condition unless core issues are resolved. There are many buyers of power
generation and distribution companies. However, they certainly want a right to
weed out corrupt element. Why the GoP wants the corrupt to flourish at national
cost?